ORANGE : 10% Hotel Room Tax Is in the Works

City officials have proposed raising the city’s hotel occupancy tax from 8% to 10% as part of a package to reduce the city’s $10.7-million deficit for fiscal 1993-94.

Only two residents spoke on the issue Tuesday night at the first of two public hearings.

If approved, city officials estimate that the tax on travelers staying in Orange motels and hotels would add $400,000 in annual revenue to city coffers.

“Businesses should be taxed, not just residents,” said Carole Walters, a civic activist who spoke in favor of the increase. “The city is having fiscal problems and residents will probably be taxed also.”

But a number of local hotel operators who did not attend Tuesday’s hearings have already told city officials they oppose the increase.

“Typically, when people look at these taxes, they think it’s hitting outsiders,” said Michelle Manire, general manager of the Doubletree Hotel in Orange. “But it actually taxes businesses in Orange, since 50% of our business comes from travelers doing business with companies in Orange.

“I’ve gotten questions from the people we do business with about the tax and it’s going to affect their bottom line because they have to pay the 2%” increase, Manire added.

Councilman Mike Spurgeon supported raising the tax as long as a portion of the revenue would be used to help keep businesses in the city.

“I would like to see some of this money earmarked, at least in spirit, for retention of businesses large and small alike,” Spurgeon said.

Supporters of the tax increase argue that at 8%, the city’s tax on hotel guests is lower than those imposed by many of the surrounding communities.

For example, the municipal transient occupancy tax in Anaheim is 13%, in Fullerton 10% and in Santa Ana 9%.

In Orange County, only Costa Mesa and Tustin currently tax travelers at rates less than 8%.

The second public hearing on raising the tax is set for May 11 at 3 p.m.